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COMMISSION OF THE EUROPEAN COMMUNITIES
COMC86) 765 final
Brussels, l~ December 1986
Proposal for a
COUNCIL DIRECTIVE
relating to the transparency of measures regulating the
pricing of medicinal products for human use and their
inclusion within the scope of the
national health insurance system
<submitted to the Council by the Commission>~
COMC86) 765 final
•
1
EXPLANATORY MEMORANDUM AND REPORT TO THE COUNCIL
on the transpa~~ncy of measures regulating the pricing of medir.inal
products for human use and their inclusion within the scope of the h•alth
insurance system and on future Community activities in this field
I. G::tiERAL CONSIDERATIONS
1. The nature of national controls
Within the Comm•mity, only about 20% of medicinal products, in
terms of value, are directly purchased by the consumer. The
remainder are prescribed b)' a physician and the whole or part of
the cost is met by the public authorities through the national
health ins~rance system. Expenditure on pharm~ceuticals represents
between 10% and 20% of national health care expenditures. In these
circumstances, all the Member States have adopted measures to
control public expenditures on pharmaceuticals, and in recent
years,
security
io~ith the ons~t of the crisis within the national social
systems, the general trend has been towards the
intensification of controls. However, the nature and severity of
the controls differs considerably between the Member States.
In five Member States, Belgium, Greece, Spain, Italy and Portugal,
a new medicinal product can only be marketed after the national
authorities have agreed the p~ice of the product. In these Member
States and in France, strict controls are exercised on the range of
products covered by the health insurance system, and ih general, a
new product will not be admitted to the list of products eligible
for reir.1bursement unless the authorities are satisfied that it
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offers a significant ·financial or therapeutic advantage over
existing therapies.· Moreover, in several of these countries the
price of medicinal products already on the market has been subject
to freezes and the increases allowed have been less than the level
of inflation.
In the United Kingdom, although manufacturers are generally free to
set prices for individual products, the overall profits made by
firms in their dealings with the national health service are
controlled. The authorities have recently introduced a system of 11selected lists11 which allows for the exclusion from the health
insurance system of more expensive products falling within seven
therapeutic groups, if cheaper alternatives are available.
In the Netherlands, the price of new medicines is not controlled,
although price increases are. Moreover, as in the case of Denmark,
provision is made for the exclusion of more expensive medicines
from the scope of the health insurance system if cheaper
alternatives are available.
In Germany, the price of medicines is uncontrolled, and there is no
possibility of excluding products from the health insurance system
on the grounds that cheaper alternatives are available. However,
in order to make financial savings, a number of therapeutic
categories have been entirely excluded from coverage by the health
insurance system.
Ireland and Luxembourg are largely dependant on medicines imported
from neighbouring countries and prices are fixed by reference to
the prices prevailing in those countries, plus an appropriate
margin to cover the costs of importation.
.· .
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It should be noted that, even ·in tho~e Member St~te~• wh~re prices
are not directly controlled, pharmaceutical companies will be
subjer.t to supervision by the national and Community competition
authorit·ies. Moreover, several Member States have attempted to
sensitize doctors to the cost of the medicines they prescribe by
transparency lists or national formularies, and in some countries
there is a system of direct r,\Onitoring of doctors prescribing
habits.
2. Their effect on the common market
The disparities which exist in the national· systems of price and
social security reimbursement controls clearly affect
intra-Community trade in medicinal products. In f~ct ~ survey of
pharm~ceutical prices carri~d out by the Statistical Office of the
european ·Communities in 1983 found the existence of wide
differentials in the prices of pharmaceuticals between the Member
States (TABLE 1), and this has been confirmed by two recent studies
carried out for th<e Commission b)' the Economists Advisory Group 1
and the European Bureau of Consumer Unions2• Moreover, the recent
increase in the volume of parallel importing of medicinal products
into certain Member States itself provides empirical evidence of
the existence of wide price differentials for individual products
within the Community. On various occasions, the European
Parliament, certain Member States, the pharmaceutical industry and
consumer groups have all criticised the vari~tions in the prices of
medicinal products which exist and the distorting effect which they
have on intra-Community trade, albeit from different perspectives.
1 The C:ommunity •s Pharrnaceuti cal Industry, 1985 2 The Consumer and Pharmaceuticals in the E.E.C., 1984
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Decisions to exclude products from the scope of the national health
insurance system also effect intra-Community trade, since, in
practical terms, a decision to exclude a prescription only drug in
this way may be tantamount to its exclusion from the national
market.
3. The industrial policy dimension
Hitherto, the European pharmaceutical industry has enjoyed a strong
competitive position on world markets and its record of innovation
has been good. Recent scientific developments, in particular in
the field of biotechnology, hold out the prospect of entirely new
perspectives for pharmaceutical research with the possibility of
offering effective treatments for hftherto incurable diseases, of
offering better treatments for existing diseases with fewer side
effects, or of replacing surgical intervention by drug therapy.
However,
costlier.
pharmaceutical research is also becoming long~r and
At the present time it takes 8 - 10 years to develop a
major innovatory product and complete all the tests and trials
required, at a total cost of 50- 100 million ECUs. This research
and development expenditure is primarily financed by the industry
itself, which devotes 10-15% of its turnover to it.
This phenomenon presents the national authorities with a dilemma
since it is clear that the single-minded pursuit of short-term
financial economies will effectively undermine the research
capacity of the pharmaceutical industry. At the present time,
therefore, each Member State must balance the objective of
controlling public expenditures on pharmaceuticals against the
objective of maintaining a competitive research-based
pharmaceutical industry. Hitherto, the reconcilation of these two
policy objectives has taken place at national level. Some
cou~tries, with a well-established domestic pharmaceutical
industry, have adopted policies which are broadly favourable to the
development of pharmaceutical research. Other countries,
particularly those who are more dependant on pharmaceutical
• "
.,
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imports, have tend~d to give 8 higher priority to the need for
savings~ However, · in recent years, some of the countries with
strict price control systems have recognised the need to encourage
pharmaceutical research, and a variety of schemes have been
developed for this purpose. !nevi tably, such schemes have been
developed by referencoe to national perspectives and they are not
~lways easy to r~concile with the fundamental principles of the EEC
Treaty relating to the free movement of goods or to fair
competition. There is therefore an urgent ne~d fot a Community
strat~gy which will reconcile. the need to ensure that reasonable
prir.es are paid for · meclication with· the need to encourage the
development of a research-based pharmaceutical industry in Europe.
4. Other disparities in the market for pharmaceuticals
The ex1stence of national systems of controls on the prices charged
by the manufact•Jrers of medicinal products and of limitations on
ti'le range of medicinal products covered by the health insurance
system is undoubtedly a major causP. of the price differentials
whith currently exist. However, other factors are also important.
At the present time the market for pharm3ceuticals within the
Community is characterised by a remark.abl~ degree of diversity.
Like prices, levels of pharmaceutical consumption also differ
considerably between the Member States (TABLE I>. Germany, with
~rguably the highest prices in the Community, also has the highest
c~ms•Jmptioi"' rate, at $ U.S. 90 per capita. However, three
countrie~ with low prices also have high consumption rates in money
terms, France <$ u.s. 80 per capita>, Belgium <$ 67 per capita> and
Italy<$ 56 per capita>. In contrast, three countries with
comparatively high prices have relatively Low consumptiori rates in
money terms, Netherlands <$ 35 per capita>, Denmark <$ 38 per
capite;)· and the U11ited Kingdom <$ 51 per capita>. These figures
suggest the existence of considerable variations of consumption in
volume terms.
3
4
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Similar differences are reflected in the statistics available for
consumption by therapeutic group. Thus, in money terms, the
systemic antibiotics accounted for 20X of Greek pharmaceutical
consumption, but only 3X of German pharmaceutical consumption in
1982. Medicines affecting the central nervous system, including
analgesics and psycholeptics, took 7X of the market in Italy, and
22% of the Danish market3•
It would be difficult, if not impossible, to know how these
differences in consumption rates would affect price formation in
the absence of controls. However, it does seem reasonable to
presume that such differences will be reflected in the prices
Member States allow to be charged for medicinal products, and in
particular how an allowance for research and development costs is
to be reflected in the price of a specific product.
Another factor which is important when considering differences in
the resale price of medicinal products between the Member States
are the differences in taxes, and in the margins allowed for
wholesalers and retail pharmacists. Thus in 1984, the retail price
of a medicinal product with an ex-factory price of 10 D.M. would
have varied between 16.10 D.M. in Italy and 22.10 D.M. in Denmark.
The effect of such differences on intra-Community trade is,
however, much less, and the Commission does not envisage presenting
proposals on the manner in which pharmacists are remunerated in the
different Member States.
5. Th~ object~~s of Community legislation
Following the adoption of five substantive directives4,
considerable progress h~s been made towards the elimination of
Economist3 Advisory Group, The Community's Pharmaceutical Industry, 1985
Council Directive 65/65/EEC, O.J. No. 22, 9.2.65, p. 369/65 Council Directive 75/318/EEC, O.J. L 147, 9.6.75, p. 1 Council Directive 75/319/EEC, O.J. L 147, 9.6.75, p. 11 Council Directive 78/25/EEC, O.J. L 11, 14.1.78, p. 18 Council Directive 83/570/EEC, O.J. L 332, 28.11.83, p. 1
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barriers to trade resulting from national public health l~gislation
designed to en5ure the qualit)·, safety and efficacy of medicinal
products. In accordcmce wi-th the White Paper on the Internal
Mark~t, proposals to elimin~te the remaining barriers to trade will
~e presented by 1989. As the free movement of med1cinal products
b€·co111es easier, the effc!:ts of national price controls are no
Lenger confined to the Member State in question. In recent years a
significant parallel trade in pharmaceutical products has
developed, with products purchased in the lower price countries
bein~ imported into ·the higher price countries and sold there,
sometimes at substantial discounts.
The fundamental aims of Community ~egir.lation on price controls and
the social security reimbursement of pharmaceuticals should be
two-fold.
Th~ ti rst aim mtJst be to ensure that the measures taken by Men1ber
States to control pharmaceutical expenditures do not pose a barrier
.to the creation of a genuine internal market for the pharmaceutical
sector by 1992. However, the realisation of the internal market is
not an end in itself but the means to the creation of a more
favourable environment for stimulating enterprise, competition and
~rade. As the White Paper "completing the Internal Market" points
out, the Commission's approach
"< ••• > must aim not simply to remove technical barriers to
··trade, but to do so in a mann~r which will contribute to
increasing industr~al efficiency and competitiveness, leading
to greater wealth and job creationM (paragraph 62).
Secondly the Commission considers· it i_mportant to ensure that
Community activity in this sector takes account of the specific
ne~d to encourage the future development of the innovatory
phar~aceutical industry, while making appropriate provision to
ensur.e that the industry does not make excessive prcfits in its
dealings ~ith the national health services. This is not merely an
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economic objective. The maintenance of a trigh level of public
health within the Community will to a large extent depend on the
activities of the Community's own pharmaceutical industry. It will
not be in the intP.rests of the European patient to become dependant
on research conducted in third countries.
In addition, any Community legislation should also contribute
towards the realisation of the other objectives of the Treaty in
the pharmaceutical sector, in particular the full application of
the Treaty rules on competition within the common market <in
particular Article 5 in connection with Articles 85 and 86). It must
also take properly into account the needs of the Member States in
ensuring the availability of an adequate supply of medicines at a
reasonable cost for their citizens.
6. A progressive approach
Preceding sections of this note have shown that at the present time
there is no consensus on the proper role of the public authorities
in regulating pharmaceutical pricing and reimbursement. In certain
Member States, very interventionist techniques are used and state
regulation has substituted itself for competitive forces. In other
Member States, greater reliance has been placed on the effects of
competition in restraining price increases. The Commission
considers it would be premature at present to propose the full
scale harmonisation of national price control and health insurance
measures. Instead, the Commission envisages a progressive approach
to the problem.
In the first instance, it is considered necessary to ensure that
the fundamental principles of the EEC Treaty are fully respected in
the operation of national price control and health insurance
sys~ems. In its recent Communication on the compatibility with
Article 30 of the EEC Treaty of measures taken by Member States relating to price controls and reimbursement of medicinal products,
the Commission has explained the conclusions which it has drawn
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from the rel~vant juri~prud~nce of the Court of Justice. However,
~t appears desirable to supplement this jurispru~ence with certain
rules· cf positiv~ law designed to ensure that national price
control ~nd reimbursement systems cp~rate in a fair and tr~nsparent
m~nncr. The Commissic•n has therefore adopted a pr:>pos,;;~l for a
Council r,irective rel.ating to the transpilrem~y ;;.f :r.easures
rcgulilting the pricing of m~dicinal products fct· h!Ji!lan vse and
their inclusion within the scope of the hec:lth insur~nce system.
Thf! obj£ctives aod r.ontent of this proposal a;~ ck"r.ribeci in
Section II.
In addition, the Commission coi"isiders that it is necessary to
consider the partial approxim~tion of national measurez in ord~r to
orientate the~ tow~rds systems ~hich have a less disruptiv~ effect
on the operation of the common ll'it:~rket and t;,~ke into accotmt the
legitim~te industrial ·pol icy objectives of the Comr.nmHy as a
whole. The Commission intends to engage in a round of intensive
ccnsultations with .interested parties in order to better define the
m~thoris by which th~se objectives P.light b~ ar.hieved. As ~ basis
for c.lisct~ssion, and without in any ~o~ay prejudicing any )'IJture
p~·opo!Sals which it might make, the Commission has t~ken this
opportunity to set out several initial reflections on this matter
in Section :UL
II~ THE PROPOSAL FOR A TRANSPARENtY DIRECTIVE
If· the Community's pharmaceutical industry is to remain
com9et1ti'Je, it must be protected from discrimination within its
o~n internal mar~et. The Cnmmission's experience in investigating
compl<lints that national measures infringf: the free movement of
~oods rules of the Tr~aty suggests that there is a lack of
tr~nsparen~y in the manner in which the national systems are
applied. Th~ · ~'n'~?:.> of the game" are not clearly defined so that
-10-
it is difficult to foresee how a given product will be treated, and
even after a decision has been taken, manufacturers are not always
sure of the real reasons for that decision. Moreover consumer
groups and Members of the European Parliament have criticised the
absence of transparency within the pharmaceutical sector.
The basic objective of the proposal for a directive is therefore to
enable all concerned to verify that the requirements of Community
law are being respected by Laying down a series of rules relating
to time-limits, the reasoning and publication of decisions, etc.,
which would be directly effective so that those concerned can
defend their interests before the national courts. In addition,
the proposal provides for cooperation at Community level. The
correct implementation of these provisions will make it easier to
detect abuses, whether on the part of industry or the Member
States, and will therefore make a limited although significant
contribution towards improving the operation of the Common Market
in this sector.
In two important cases5, the Court of Justice has provided
guidance on the application of Articles 30-36 of the EEC Treaty to
national price control and reimbursement measures affecting
medicinal products. The Commission has explained the conclusions
it has drawn from this jurisprudence and has explained the policy
it will adopt towards alLegations of infringements in the
Communication referred to above. It is important to emphasise that
the present proposal is intended to complement this body of
pre-existing law. It is not intended to, and indeed cannot
derogate from these fundamental principles. In presenting this
proposal, the Commission reserves the right to commence proceedings
under Article 169 of the EEC Treaty or to pursu~ such proceedings
as have already been opened against Member States which in its view
have faile~ to fulfil the obligations incumbent upon them in this
sector under the EEC Treaty.
5 Case 181/82 Roussel 119837 ECR 3849. Case 238/82 Duphar £198~7 ECR 523.
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A proposal to increase the transparency of national procedures
relating to price control and reimbursement of medicinal products
must necessarily rel.ate primarily to the obligations of Member
States during the decision-making procedure. However, it should
not be thought that all the obligations lie on the one side only.
If any system of price or reimbursement controls is to operate
fairly, it is incumbent upon the manufacturer to provide such
information as the authorities may reasonably request and to engage
in an open dialogue in which each side takes account of the needs
of the other. Thus the proposal requires manufacturers to give
re~sons fo~ the prices they wish to charge.
2. Price cont;ols on individual medicinal products
In countries where the marketing of a new medicinal product is
permitted only after the competent .national authorities have
approved the price for that· product, the following rules would
apply. The manufacturer would be obliged to notify the authorities
of his intention to market a medicinal product, indicating the
price at which he ·proposed the product be sold and providing
appropriate information in support of his proposal. The competent
authorities concerned would be required to reach a decision on this
notification within 90 days of its receipt. Should the authorities
reject the price proposed by the firm, they would be obliged to
give a detailed statement of reasons. There would be a right of
appeal. Analogous provisions would apply in c·:ountries where the
price of medicinal products can be increased only with the approval
of the authorities.
3. Frice freezes
Long term price freezes can have a particularly disruptive effect
on the operation of the common market, because they prevent
differences in relative inflation rates and currency movements from
being reflected in the price of products. The Commission is
therefore proposing that in the event of a general freeze on
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pharmaceutical prices, the Member State concerned should be
required to review and if necessary adjust the overall level of
pharmaceutical prices at least once a year, or whenever the
national resale price index has increased by 10% since the last
review. In addition, any firm should be able to submit an
application for a derogation from the .freeze and be entitled to a
decision from the competent authorities within 90 days~
In reviewing prices, Member States will wish to take a wide variety
of factors into account, including not only the economic indicators
referred to above but also such factors as changes in the market·
situation and the gains in efficiency which might be expected.
4. Profit .controls
When a Member State resorts to a system of controls on the
profitability of pharmaceutical firms, it does not specify a single
target rate of profit which is applicable to all companies
operating within the sector. The rate of profit allowed is
variable, with somewhat higher profits being given to firms which
engage in successful pharmaceutical research or which increase
their efficiency. Thus the target rate of profit for each firm is
fixed individually. Since the rate will depend on such factors as
the investment programme of the firm,
development activities, there is a strong
suggests that individual profit rates
and its research and
body of opinion which
must be confidential.
Nevertheless, the Commission considers that it is incumbent on
Member States who operate such a system to publish certain
information each year so that each company can verify that it is
being fairly treated. This information should include the average target profit for the industry as a whole for the year in question,
and the minimum and maximum rates, and the criteria used in
deciding on the target rate for each firm.
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5. Social Security Rei~bursement
As noted above, in certain Member States a medicinal product will
not be available under the national health insurance system unless
"it has been included in a positive list, while in other Member
States negative lists of products exc luced from the scope of the
~ational health insurance syste~ are used.
Where a system of positive lists is used, the Member Stc.tes shoul(j
er"sure that decisions are reached on appl"! ,.:ztions ~ithin 90 days.
1\s the Com!!lission has stated in th'! Communicatio1·,, deCisions to
exdude products from reimbursement l'l'ttSt be ve;ifiable by every
irr;porter. This means that reasons must be given for national
decisions. "t-:~hen the reason given · for exclusion relates to the
existence on the market of other products having ,~n eqtJivalent
t:1erapeuti c effect, the decision must name these prorlucts, give
the.i.r prices and details of the dosage and duration of treatment
us~d to compare prices." Moreover, decisions "must be notified to
the firms concerned with an indication ~f the. means ~f r~dress open
against such decisions and the time-limits ~ithin which> appeals
must be made 11•. Analogous provisions are l:!id down for a system of
negative lists.
6. C lassi fi cat ion of products. eligible for r'!·i m~~~~!!!.~.
The classification of medicinal products presents particular
d-ifficulties, and several international classifications are
availi'ible. Nevertheless, within the framework of reimbursement,
classification is particularly important because it affects the
choice of the reference products which are used to decide whether
or not a new product represe~ts value for money. Moreover, in some
Member States, ~ifferences i~ classification may affect the
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proportion of the cost of the medicine which is reimbursed to the
patient.· The proposal therefore envisages delegating to the
Commission, after consulting a Consultative Committee, the power to
issue a directive to harmonise the classification of medicinal
products for social security purposes within the Community~
7. "Transfer prices"
For well known economic reasons, the pharmaceutical industry is
organised on a multi-national basis. Research and development
activities and the manufacture of active prin~iples is often
concentrated at a limited number of sites, and the active principle
or an intermediate product is taken to the importing country for
the manufacture of the final product. In fact trade in
intermediate products is of considerable economic significance and
much of it consists of transfers within the same group of companies
rather than "arms-length" transactions. In any system of price or
profit controls, the competent authorities have the difficult task
of verifying the reasonableness of these so-called transfer prices.
The Commission considers that this. is a matter for further
consideration at Community level. The Commission is therefore
proposing that those Member States which do attempt to verify
transfer prices should be required to notify the criteria used to
the Commission, and provision is made for the future approximation
of these criteria, if necessary.
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III. THE FUTURE
1. General
There· are those who question the need for any form of control on
pharmaceutical pricing or the reimbursement of medicinal products
and accordingly argue that price formation in the pharmaceutical
sector should be left to market forces. This point of view appears
unrealistic. For as long as the public authorities meet a
substantial part of the cost of medicinal products through the
national health insurance system, the competent authorities will
have a legitimate interest in ensuring that good value for money is
obtained and in ensuring that companies do not make excessive
profits. As mentioned above, in addition to providing support for
the Member States, the aims of Community policy must be to ensure
that such measures do not adversely affect the operation of the
internal market and take due account of the need to maintain a high
level of innovation within the Community.
2. Prices of products which are not avai table under the national
health -insurance system
The primary justification for imposing controls on pharmaceutical
prices is the need to control expenditures in the national health
insurance system. This justification does not apply in the case of
products which are not available under the health insurance system.
In the case of products which can be purchased directly by the
consumer, normal competitive prices apply, since the consumer can
select the product which represents the best value for money
~imself, if necessary after consulting the pharmacist. It would
therefore seem appropriate to aim for the elimination of controls
on these products, although Member States would still be able to
impose a freeze on their prices, provided that such a freeze also
applied t: c:ther sectors of the economy as part of an overall
anti-inflation strategy.
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3. Price and profit controls
In general terms, it is possible to distinguish between three
systems of controls which are used within the Community at the
present time: price control based upon costs; price control based
upon a comparaison with other products and profit control. All
three systems have their disadvantages. In a system of price
control based upon the actual costs incurred by the product it is
difficult to obtain the information necessary to calculate the
overall price. Moreover a cost plus price control system contains
no incentive for firms to increase efficiency in production if all
the costs actua~~y incurred are taken into account. In a system of
price control based upon a comparaison between products, the choice
of reference products may be difficult and controversial,
particularly in the case of a major innovatory product where there
is no obvious substitute. Moreover any system of individual
product price controls reduces whatever possibilities for price
competition exist within the pharmaceutical sector. On the other
hand, while a system of profit control does leave some scope for
competitive forces, its administration is complex, and it needs to
be carefully adjusted if it is to achieve the objectives of
promoting innovation and efficiency while maintaining reasonable
prices.
In these circumstances, the Commission does not consider it
possible to hold up one or other system as a model for those ·Member
States who wish to operate a price control system. Instead, the
Commission intends to enter into consultations with. the Member
States concerned with a view to identifying those aspects of the
national systems which pose the greatest potential problems for the
internal market and the manner in which they might be changed.
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4. Coverage by the national health insurance system
It is clear that Member States will wish to retain the right to
exclude entire cat~gories of medicinal products from their health
insurance system, on the grounds, for example, that such products
may be purchased by the consumer without a medical prescription, or
t~at the products are intended for the symptomatic relief of minor
and self-limiting ailments.
The application of price criteria in deciding whether to exclude
individual products from the scope 6f the health insurance system
gives rise to difficulties resulting from the interpretation of the
notion of therapeutic equivalenre. Within the framework of
medicines licensing (marketing authorization>, the concept of
therapeutic equivalence has a relatively clear meaning: the same
pharmaceutical form and route of administration· together with
bio-equivalence. However if this approach is applied to
reimbursement, it means that the vast •ajority of medicinal
products are automatically eligible for reimbursement unless a
generic or branded gene~ic.copy is available. For this reason, in
the framewotk of reimbursement, the authorities take a wider view
of equivalence, looking at the ability of the medicine to treat a
particul~r disease at a given cost (cost/benefit ev~luation). Such
an approach inevitably gives rise to difficulties of interpretation
and evaluation.
It therefore appears necessary to try to achieve a greater degree
of coordination of nation~l decisions. In the first instance, it
may be desirable to consider the establishment of a Community level \ .
forum in which the therapeutic advantages of new medicinal products
could be discussed, having regard to their indications,
contra~indications, side effects, etc. The national health
authorities would then be able to use an opinion from this forum as
the basis for determining the status of a product within the
national health insurance system.
ld'
TABLE I - INDICES OF LEVEL OF PRICES OF MEDICINAL PRODUCTS + PER CAPITA CONSUMPTION
PRICES DE OK NL IRL BE UK FR GR IT ·,
E C Stat is tical 0 f f ice, 169 159 149 118 106 ' 103 78 75 59 1983 EC Average = 100
Health Econ., 1982 143 143 129 66 1 DO 57 66 UK = 100
EFPIA, 1985 170 160 100 142 109 103 8 = 100
>
PER CAPITA CONSUMPTION 90 38 35 37 67 51 80 36 56 IN $ U.S., ECONOMISTS ADVISORY L GROUP, 1982
-- --~---- ----- - ------- - -·-L___ ---- -- --
,.,
PROPOSAL FOR A COUNCIL DIRECTIVE
RELATING TO THE TRANSPARENCY OF MEASURES REGULATING
THE PRICING OF MEDICINAL PRODUCTS FOR HUMAN USE
AND THEIR INCLUSION WITHIN THE SCOPE OF THE
NATIONAL HEALTH INSURANCE SYSTEM
THE COUNCIL OF THE EUROPEAN COMMUNITIES,
Having regard to tne Treaty establisning the European Economic Community,
and in particular Article 100 thereof,
Having regard to the proposal from the Commission·•,
? Having regard to the opinion of the European Parliament-i
Having regard to the opinion of tne Economic and Social Committee3,
Whereas marketing authorizations for proprietary medicinal products issued
pursuant to Council Directive 65/65/EEC of 26 January 1965 on the
approximation of provisions laid down by law, regulation or administrative
action relating to proprietary medicinal ~roducts4 may be refused only for
reasons relating to the quality, safety or efficacy of the proprietary
medicinal product concerned;
1
2
3
4 OJ No. 22 of 9.2.1965, p. 369/65
-20·
Whereas Member States have adopted measures of an economic nature on the
marketing of medicinal products in order to control or reduce public health
expenditures on medicinal products; whereas such measures include direct
and indirect controls on the prices of medicinal products and Limitations
on the range of products covered by the national health insurance system;
Whereas the primary objective of such measures is the promotion of public
health by ensuring the availability of adequate supplies of medicinal
products at a reasonable cost; whereas however such measures should also be
intended to promote efficiency in the production of medicinal products and
to encourage research and development into new medicinal ~roducts, on which
the maintenance of a high level of public health within the Community
ultimately depends;
Whereas disparities in such measures may hinder or distort intra-Community
trade in medicinal products and thereby directly affect the functioning of
the common market in medicinal products;
Whereas as a first step towards the removal of these disparities, it is
urgently necessary to lay down a series of requirements intended to ensure
that all concerned can verify that the national measures do not constitute
quantitative restrictions on imports or exports or measures having
equivalent effect thereto; whereas, however, these requirements do not
effect the policies of the Member States who rely primarily upon free
competition to determine the price of medicinal products;
Whereas the further approximation of such measures must take place
progressively;
HAS ADOPTED THE FOLLOWING DIRECTIVE:
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Article 1
1. Member States shall ensure that any national measure, whether Laid down
by law, regulation or administrative action, · to control the prices of
medicinal products for human use or to restrict the range of medicinal
products CO\fered by their national health insurance systems complies
~ith the requirement~ of this Directive.
2. ihe definition of "medicinal. products" Laid down in Article 1 of
Council Oi rective 65/65/EEC of 26 January 1965 shall apply to this
Direr.tive.
3. Nothing in this Directive shall permit the marketing of a proprietary
medicinal product in respect of which the authorization provided f~r in
Article 3 of Council Directive 65/65/EEC of 26 January 1965 has not
been issued.
ArticlP. 2
The follo~ing provisions shall apply if the marketing of a medicinal
product is permit ted only after the competent authorities of the Member
State concerned have approved the price of the product:
1. Member States shall ensure that a decision on the price which may be
charged for the medicinal product concerned
to the applicant within 90 days of the
submitted in due form. In the absence
is ad6pted and communicated
receipt of an application
of such a decision, the
applicant shall be entitled to market the product at the price
proposed.
2. Should the competent authorities decide not to permit the marketing of
the medicinal product concerned at the price proposed by the applicant,
the decision shall contain a detailed statement of reasons. In
addition, the applicant shall be informed of the remedies available to
him under the laws in force and the time-limits allowed for applying
for such remedies.
3. At least once every six months the competent authorities shall publish
in an appropriate official publication and communicate to the
Commission a list of the medicinal products whose price has been fixed
during the relevant . period together with the prices which may be
charged for such products.
Article 3
Without prejudice to Article 4, the following provisions shall apply if an
increase in the price of a medicinal product is permitted only after prior
approval has been obtained from the competent authorities:
1. Member States shall ensure that a decision is adopted on an application
submitted in due form to increase the price of a medicinal product and
communicated to the applicant within 90 days of its receipt. In the
absence of such a decision, the applicant shall be entitled to apply in
full the price increase requested.
2. Should the competent authorities decide not to permit the whole or part
of the price increase requested, the decision shall contain a detailed
statement of reasons and the applicant shall be informed of the
remedies available to him under the laws in force and the time-limits allowed for applying for such remedies.
3. At least once every six months the competent authorities shall publish
in an approp~iate official publication and communicate to the
Commission a list of the medicinal products for which price increases
have been granted during the relevant period together with the new
price which may be charged for such products.
Article 4
1. In the event of a freeze being imposed on the prices of all medicinal
products or certain categories of medicinal products, Member States
shall.ensure that prices are reviewed, and where appropriate adjusted,
at least once a year or when the national resale price· index has
increased by ten per cent since the last review, whichever is the
sooner. Within 90 days of the commencement of this review the
competent authorities shall announce what increases or cler;reases in
prices are being made.
2. Any person who is responsible for marketing a medicinal product may
apply for a derogation from. a price freeze, stating his reasons in
detail. Member States shall ensure that a reasoned decision on any
such application is adopted and communicated to the applicant within 90
days. In the absence of such a decision, the app l i cC!Int shall be
entitled to apply in full the price increase requested. Should the
derogation be granted, the competent authorities shall forthwith
publish an announcement of the price increase allowed.
Article 5
Where a Member State adopts a system of direct or indirect controls on the
profitability of manufacturers and importers of medicinal products, tile
Member State concerned shall publish the following information in an
appropriate official publication and communicate it to the Commission:
-"14-
a> the method or methods used to define profitability; return on sales
and/or return on capital,
b) the criteria according to which target rates of profit are accorded to
individual manufacturers or importers together with the criteria
according to which manufacturers or importers will be allowed to retain
profits above their given targets,
c> the range of target profit, including the average target rate of profit
for manufacturers or importers for the previous year and the current
year,
d) whether any company failed to reach their allocated target,
e) the maximum percentage profit which any manufacturer or importer has
been allowed to retain above their target.
This information shall be updated at least once a year.
Where, in addition to a system of direct or indirect controls on profits, a
Member State operates a system .of controls on the prices of certain types
of medicinal products, which are excluded from the scope of the profit
control scheme, the provisions of Articles 2 - 4 shall apply to such price
controls. However, Articles 2 - 4 shall not apply where the normal
operation of a system of direct or indirect controls on profits results
exceptionally in a price being fixed for an individual medicinal product.
Article 6
The following provisions shall apply if a medicinal product is covered by
the national health insurance system only after the competent authorities
have decided to include the medicinal product concerned in a positive list
of medicinal products covered by the national health insurance system.
-tS·
1. Member States shall ensure that a decision on an application submitted
in due form to· include a medicinal product in the list of medicinal
products covered by the health insurance system is adopted and
communicated to the applicant within 90 days of its receipt. An
application · under this Article may be made before the competent
authorities have agreed the price to be charged for the product
pursuant to Articl~ 2.
2. Any decision not to include a medicinal product in the list of products
covered by the health insurance system shall state in detail the
reasons upon which it is based. In addition the applicant shall be
informed of the remedies available to him under the laws in force, and
the time-limits allowed for applying for such remedies.
3. Before the date referred to in Article 11<1) of this Directive the
Member States shall publish in an appropri~te official publication and
communicate to the Commission the criteria which are to be taken into
account by the competent authorities in deciding whether or not to
include medicinal products on the lists.
4. Within one year of the date referred to in Article 11<1) of this
Directive, the Member States shall publish in an appropriate official
publication and communicate to the Commission a complete list of the
products covered by their health insurance system, together with their
prices.
months.
This information shall be updated at least once every six
Article 7
The following provisions shall apply if. the competent authorities of a
Member State are empowered to adopt decisions to exclude individual or
categories of medicinal products from the coverage of its national health
insurance system (negative lists>.
1. Any decision to exclude a category of medicinal products from the
coverage of the national health insurance system shall state in detail
the reasons on which it is based and be published in an appropriate
official publication.
2. Before the date referred to in Article 11(1) of this Directive, Member
States shall publish in an appropriate official publication and
communicate to the Commission the criteria which are to be taken into
account by the competent authorities in deciding whether or not to
exclude an individual medicinal product from the coverage of the
national health insurance system.
3. Any decision to exclude an individual medicinal product from the
coverage of the national health insurance system shall state in detail
the reasons on which it is based. Such decisions shall be communicated
to the person· responsible, who shall be informed of the remedies
available to him under the laws in force and the time-limits allowed
for applying for such remedies.
4. Within one year of the date referred to in Article 11 C1> of this
Directive, the competent authorities shall publish in an appropriate
official publication and communicate to the Commission a list of the
individual medicinal products which have been excluded from the scope
of its health insurance system. This information shall be updated at
least every six months.
Article 8
1. Before the date referred to in Article 11<1) of this Directive, the
Member States shall communicate to the Commission any therapeutic
classification of medicinal products which is used by the competent
authorities for the purposes of the national social security system.
If it considers it necessary, the Commission may, after considering the
opinion of the Committee referred to in Article 10, adopt a directive
on the approximation of national provisions relating to the
classification of medicinal products for social security purposes.
2. Before the date referred to in Article 11<1) of this Directive, the
Member States shall communicate to the Commission the criteria which
are used by the competent authorities in verifying the fairness of the
prices charged for transfers within a group of companies of active
principles or intermediate products used in the manufacture of
medicinal products. If it considers it necessary, the Commission may,
after considering the opinion of the Committee referred to in
Article 10, adopt a directive or issue guidelines on the approximation
of national criteria for the verification of the fairness of such
prices.
Article 9
1. In the light of experience, the Commission shall, not later than two
years after the date referred to in Article 11(1) of this Directive,
~ubmit to the Council ~ proposal cohtaining appropriate measures
leading towards the abolition of any remaining barriers to or
distortions of the free movement of proprietary medicinal products.
2. The Council shall decide on the Commission proposal not later than one
year after its submission.
Article 10
1. A Committee called the Consultative Committee on Pharmaceutical Pricing
and Reimbursement shall be set up and attached to the Commission.
2. The tasks of the Committee shall be:
-to examine any question relating to the application of this Directive
which is brought up by its chairman either on his initiative or at
the request of a Member State;
to discuss and provide an opinion on matters referred to it by the
Commission pursuant to Article 8 of this Directive or in accordance
with the provisions of any future directive. When seeking the
opinion of the Committee, the Commission may set a time-limit within
which such an opinion shall be given. No vote shall be taken.
However any member of the Committee may demand that his views be set
down in the minutes.
3. The Committee shall consist of one representative from each Member
State. There shall be one deputy for each representative. This deputy
shall be entitled to participate in meetings of the Committee.
4. A representative of the Commission shall chair the Committee.
5. The Committee shall adopt its rules of procedure.
.. •
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Article 11
1. Member States shall bring into force the laws, regulations and
administrative provisions necessary to comply with this Directive by
1 January 1989 at the latest. They shall forthwith inform the
Commission thereof.
2. Before the date referred to in paragraph 1, Member States shall
communicate to the Commission the texts of any law ··regulations or
administrative provisions relating to the pricing of medicinal
products, the profitability of manufacturers of medicinal products and
the .coverage of medicinal products by the national health insurance
system. Amendments and modifications to these laws, re_gulations or
administrative provisions shall be communicated to the Commission
forthwith.
Article 12
This Directive is addressed to the Member States.
FINANCIAL STATEMENT
relating to the Commission proposal for a Council Directive relating to the transparency of measures regulating the pricing of
medicinal products for human use and their inclusion within the scope of the national health iMsurance system
Although the measures proposed do not strictly constitute new actions, they will result in new responsibilities for the Commission department concerned COG III/A/3 "Pharmacy and Veterinary Medicines").
1. Budget headings
No 1100 salaries of officials and temporary agents No 2510 travelling expenses of members of institutionalised committees No 2600 expenses of studies, experts and consultants N° 1301 missions
2. Legal basis
Article 100 (100 A) of the EEC Treaty
3. Description of the project
- to ensure that national systems to limit public health expenditures on medicinal products do not disrupt the operation of the internal market
a) to study the detailed effects of national price control and reimbursement systems on the operation of the common market and make detailed pr9posals for appropriate adjustment;
b) to coordinate certain aspects of the operation of national price control and reimbursement systems in particular the classification of medicines for reimbursement purposes and the assessment of the reasonableness of transfer prices;
c) to assess the impact of divergencies in price control and reimbursement systems on industrial efficiency and innovation within the framework of the Commission's programme of research into the"cost of non-Europ~'.
4. Justification of the project
There are wide disparities between national systems of price control and reimbursement of medicinal products within the Community. These differences result from fundamental differences in political and economic philosophy and it is not realistically feasible to undertake the full-scale approximation of national price control systems at present. The resources presently available to the Commission service responsible are not adequate to undertake the detailed studies and negotiations with Member States which are required •
• I • •
·' ••
The ope~ation of ~ational syste~s of price control and soci~l security reimbursament c.re resulti:1q ir. major disparities in the price of p~armaceuticals, which are resulting iM distortions of intra-Community trade, and are being criticised by_t~e European Parlial!lent, the Industry and consumer groupsw
5. Financial implic~t1ons for personnel and operating appropriations
a) Ac!1itional personnel for DG III/A/3 "Pharmacy .;nd Veterinary Medicines" frrirn 1988:
~ economist with knowledge of the problems of price formation in t~e pharmaceutical sector'CA7>
- 1 secretary CC3l
b) Allowance for meetings of institutional committees from 1988:
- 4 me~tings of national experts en price control p~r annum ~travelling expenses for 2 experts per Member State -! 40.000 ECU/p.a.)
c) Appropriations for outside consultants, multi-client studies and economic documentation on pharmaceutical pricing and reimbursement (+ 100.000 ECU/p.a.)
d) Appropriations for missions to the competent national authorities
STATEMENT OF IMPACT ON SMALL AND MEDIUM-SIZED FIRMS AND EMPlOYMENT
1. ADMINISTRATIVE OBLIGATIONS ARISING FROM THE APPLICA.TION OF THE LEGISLATION FOR FIRMS
The proposal will not increase the obligations on firms which result from national price control procedures.
2. ADVANTAGES FOR THE FIRM
- YES/Nil
- WHICH - greater transparency in national decision-making procedures relating to price control and reimbursement of medicines
3. INCONVENIENCE FOR THE FIRM
XIS/NO
CONSEQUENCES
4. EFFECT ON EMPLOYMENT
No direct effects.
5. HAS PRIOR CONCERTATION WITH THE SOCIAL PARTNERS TAKEN PLACE?
YES/KII - consultation of pharmaceutical industry
OPINION OF SOCIAL PARTNERS - generally favourable
6. IS THERE A LESS RESTRICTIVE ALTERNATIVE?
No.
A
~.~ I T